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This Is Uncomfortable

Trump’s Greenland interest throws mining into focus

Victoria Craig Aug 22, 2019
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Nuuk Harbour, Nuuk, the capital of Greenland.
Martin Zwick/Getty Images

Denmark may have rebuffed President Donald Trump’s offer to purchase Greenland this week, but the two countries have expressed desire to strengthen cooperation in the Arctic, including in the northern territory.

Aside from security and strategic benefits for the U.S., Greenland’s abundance of rare earth metals presents both a political and economic opportunity. Particularly for any U.S. efforts to diversify away from dependence on China’s raw materials that are used in everything from smartphones and LCD screens to missiles and hybrid vehicles.

In fact, Greenland’s mineral resources minister, Erik Jensen, said there is untapped potential for mining there, which holds more than 38 million tons of the world’s rare earth deposits.

“There’s some part of Greenland that’s still not explored. But I know that South Greenland has a lot of  opportunities and we would like to develop this opportunity with other countries that would like to invest in Greenland’s mineral resources,” he said.

“We have good cooperation with the United States and we would like to cooperate further and more with the United States … and we hope that work will develop in other areas for benefit for Greenland.”

Further development of the industry would also allow Greenland to diversify its own economy from a focus on fisheries and related industries. Greenland currently relies on Denmark for two-thirds of its budget revenue.

While there is potential for Greenland to take a bigger slice of the mining industry, China is the biggest player in the rare earth elements space. More than 70% of them are mined and processed in the country. That means, for now, American giants like Apple and Lockheed Martin are dependent on the country’s supplies.

“Given that the U.S. is so entirely dependent on rare earth elements and its imports of China … this gives China an incredible secret weapon in the trade wars,” said Dwayne Ryan Menezes, managing director of the Polar Research and Policy Initiative.

“China is able to use that economic tool at its disposal to further its resource diplomacy. China’s done this in the past: In 2010 due to a territorial dispute with Japan, [it] blocked production which caused prices of rare earth elements to soar.”

For Greenland, the trade spat with China could be a catalyst to develop closer ties with other nations like the U.S. interested in its vast natural resources. And, Menezes said this development could be the first time China finds a rival in the rare earths space.

But, he notes China is still an active player in Greenland’s rare earths mining space already through both its own companies and joint ventures with U.S. and Australian firms.

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